The Telegraph
Since 1st March, 1999
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Purnendu, govt in open war

Aug. 3: Haldia Petrochemicals today encashed the Rs 150-crore cheque given by Indian Oil Corporation, paving the way for the company to join as an equity partner and triggering a legal challenge by Purnendu Chatterjee.

While Chatterjee’s lawyer filed a case in the company law board against Haldia allotting 7.5 per cent shares to Indian Oil against the payment, sources close to him said the company had lost Rs 300 crore in a day because of the Bengal government’s decision.

Relations between the two partners ' the state government and Chatterjee ' had deteriorated of late but today’s development moved them into an eyeball-to-eyeball position.

A copy of the petition is not yet available, but it is learnt that Chatterjee has made the Bengal government, Haldia Petrochem and Indian Oil parties to the case.

“IOC is extremely delighted that the cheque has been encashed. It had been a long wait for us. We expect the shares to be issued shortly,” said an Indian Oil official earlier in the day.

The cheque was issued in February but had not been encashed because of Chatterjee’s objection, which the government finally overruled.

Tarun Das, the company’s chairman, took the initiative to see that the cheque was encashed before August 18, the last date of validity. He had a meeting with the government last week where it was decided to settle the issue.

Chatterjee moved fast after the encashment, with his lawyer, Abhishek Singhvi, alleging that transfer of shares to Indian Oil “involved a breach of trust” on the part of the government as it had violated an agreement signed with Chatterjee in 1994. He said the government was bound not to issue shares to any entity without Chatterjee’s consent.

The government advocate confirmed that shares had been allotted. But he sought more time to present the facts as he had to appear in court at short notice.

Company law board chairman S. Balasubramanian adjourned the matter till tomorrow.

Of Haldia’s Rs 1,410-crore equity, the government holds 36.87 per cent, the Tatas 3.19 per cent and Chatterjee and his associates the rest.

Chatterjee is accusing the government of selling to Indian Oil cheap because had the shares been given to it at the price he was asked to pay for the government’s stake, the figure would have been Rs 300 crore more.

The government’s aborted offer to sell to Chatterjee envisaged a price just under Rs 29 a share with a total payment of around Rs 1,560 crore for a 36.87 per cent holding.

There was a heated argument between Singhvi and lawyers on the opposing side, which pointed out that the decision to allot the shares to Indian Oil had been cleared by the company’s board.

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